Medvedev, who is due to step down in May in favour of current Prime Minister Vladimir Putin (see background), signed the new bill into law at a meeting with opposition leaders. However, the event was boycotted by organisers of the recent anti-Kremlin protests in Moscow and other large cities.
The new law will make it easier to register political parties, cutting the required number of members to 500 from the previous 40,000, and should benefit the groups behind the protests.
The Moscow Times writes that 45 party leaders invited to the Kremlin represented a mixed crowd, including a few high-profile political figures from the 1990s, such as Communists Viktor Anpilov and Gennady Selesnyov, and lesser-known figures like nationalist leader Sergei Baburin and Right Cause leader Andrei Dunayev.
Refusing to attend were prominent political figures Sergei Udaltsov, leader of opposition movement Left Front, and Oleg Mitvol, a former Moscow prefect and would-be leader of a green party.
After learning that party leaders would not be allowed to speak at the meeting, Udaltsov cancelled his plans to take part.
According to critics, a threshold for registration as low as 500 members would in fact benefit the party in power, as a opposition consisting of a myriad of parties is easier to manipulate.
"I believe that many parties will appear now. This is the authorities' idea - to flood the political space with many new parties, to create chaos," Sergei Udaltsov said, quoted by Reuters.
Russia's President-elect Vladimir Putin has said that some barriers for registration should remain in place in order to prevent the creation of regional nationalist parties which could fuel separatist sentiment in the multi-ethnic oil-rich country.
The Duma or lower house of parliament, dominated by United Russia, is also reviewing a bill on the direct election of regional governors, who are currently de-facto appointed by the president.
The authorities are betting that the new legislation will keep the opposition busy with local election campaigns, distracting its attention away from the Kremlin and the government during Putin's six-year term.
Bad news for Khodorkovsky
At the same time there was bad news for the supporters of jailed anti-Kremlin tycoon Mikhail Khodorkovsky, who will not be granted a presidential pardon.
Rejecting an argument from the businessman’s lawyers, Medvedev has decided anyone seeking a pardon must actually ask for clemency and show remorse for their crime.
Khodorkovsky was sentenced to 13 years and six months in prison for oil theft and money laundering – though he has always maintained his innocence. He was convicted twice on fraud charges and is currently set to remain in jail until 2017.
The Khodorkovsky case was seen by some as the biggest test for Medvedev to show a new style in politics and some independence from his hardline mentor Vladimir Putin. Last year, a close collaborator to Medvedev told a Brussels audience that his boss didn't live in an environment "favourable to liberalism, democracy and stuff like that".